NRF 2018 live - How DAVIDsTEA uses loyalty program data to change experiences - and results

Retail transformation sounds great - until you hit a data wall. Live at NRF 2018, DAVIDsTEA told me how they turned their loyalty program data into a much broader effort. Their partner AgilOne was on hand to help share the results.

In the case of DAVIDsTEA, that story is about harvesting data from a successful loyalty program - and applying that info to change the customer experience in specific, targeted ways. And yes - measuring the results.

But every interview has a tricky moment. In this case, Laporte did not bring DAVIDsTEA samples to the interview (if you're still on the ground at NRF, you can get them at the AgilOne booth).

DAVIDsTEA - how do you move an in-store experience online?

As a hardcore tea buff, I bravely pushed my disappointment aside, but I wanted to know: what's the DAVIDsTEA difference? Laporte told me their 240 stores in Canada are designed to provide a "playful" experience that will appeal to the tea lover - but also bring new tea drinkers into the fold:

I always use my own example: I didn't drink tea. Tea was for my mother, and it was somewhere in the cupboard. When you go to DAVIDsTEA, it's a great alternative for water. It's a great alternative for juice. It's a great alternative for sports drink. We actually saw a big conversion from the non-tea drinker to becoming tea drinkers with DAVIDsTEA.

So that's the in-store experience, but Laporte also takes pride in the products. I asked her what sets their tea apart?

Oh, obviously the taste and the ingredients.

And about those ingredients? Unique flavor blends have proven popular:

We look at trending ingredients. Right now one of our best selling tea is Lemon Cayenne Cleanse... We also have our best selling Forever Nuts. It's actually herbal. We do very well with herbals.

But as Laporte told me, recreating that product/experience combination online is a core challenge:

I think it's very challenging to recreate that. DAVIDsTEA is very unique. We have a lens to the loose leaf tea business, and it's very different from other brands... And then the second piece is really the customer experience - and how the brand was can be built through one-on-one interactions.

Loyalty programs and the problem of under-utilized data

Despite their growth, DAVIDsTEA felt that their loyalty program data was not being used to its potential. In 2014, DAVIDsTEA launched their "Frequent Steeper" Loyalty Program. The program took off - with 80 percent of transactions attached to the program. That pulled in loads of customer data, but it was untapped:

Where it's online or in a store, that means a lot of data is being collected - but there was nobody to really look at it, analyze it and really power back with it.

The problem/opportunity went far beyond marketing:

The challenge we've been having was: how do you power this data? How do you use it to fuel the rest of the organization? So not only in a customer standpoint, but also from a product standpoint - to make business decisions on a daily basis?

DAVIDsTEA leadership, including the CFO, met with AgilOne, and a plan was hatched. AgilOne's Artun brought up a crucial point: it's not just about improving the customer experience with data. It's about identifying high-value customers, and personalizing to get better engagement for specific customer segments:

I think DAVIDsTEA really recognized that their customer is the focus of the brand. It's all about the individual experience. I think that's what they were really trying to achieve. That led them to ask: "Okay, we have scores; we have a great product, but we now we need to really understand who the customer is, what they're looking for and how they behave."

The loyalty program gave DAVIDsTEA a huge head start, based on the opt-in customer data already logged:

That program gave them the means of the data that's required to do that. And then they were looking for a way to say: "How do I understand my high value customers? How do I tailor my messages to them?" All of the things to get them there.

Better use of data starts with the right questions?

Laporte added: "To Omer's point, I really saw the shift." Working with AgilOne, Laporte's team pursued answers to questions like these:

What's a value of a customer?

What's their return rate?

How many customers we have that are active?

How many have we lost?

How many are new?

Where do they transact?

What's the value of a multi-channel versus a single channel customer?

But questions only get you so far. It's the actions that matter. Take this example:

How many customers were we able to maintain year after year?

Moving from data questions to results

Through the actions taken via AgilOne's data, DAVIDsTEA increased their customer retention rate by five percent this year. Laporte:

This is all through the trigger program that we put in place, through all the data that we're seeing in the platform. Basically all the learnings we have from the platform that allows us to see that.

The data from AgilOne points to an answer; then the appropriate DAVIDsTEA team follows it through. Another example would be: determining a desirable customer demographic for tea consumption. Then that demographic can be targeted via Facebook promotions, etc.

Another win? The rate of re-activated DAVIDsTEA customers is up 47 percent. (that means a customer that was active, say, in 2015, but not in 2016).

Figuring out the precise number for an action is huge. In the case of retention, the magic number is 140 days. Artun:

By looking at that metric, you can figure out there's a break point around 140 days. So what the brand does is that, as the customer stops coming to the store or buying online, keep track of how long it's been - and create a trigger message.

With any data project, the plumbing is important. AgilOne pulls relevant data from DAVIDsTEA's operational systems, including its Microsoft Dynamics ERP. They also pull data into AgilOne from their marketing campaigns on Facebook and elsewhere. "The data is being pushed there every day," says Laporte.

The wrap - passionate fans are the foundation

As per my point in yesterday's NRF 2018 piece on the limitations of data science for retail, you have to get the value prop right. That means passionate "fans" aka consumers. Otherwise your data will be limited, and personalization will fall flat. DAVIDsTEA has that part down: they have a 30,000+ fan page that's created and run entirely by DAVIDsTEA enthusiasts.

Their own Instagram page has 250,000 fans, and DAVIDsTEA is getting solid Facebook engagement even as Facebook downplays brand postings - a sure sign of user engagement (Laporte says their last post got 11,000 likes).

Though these online successes are encouraging, Laporte says there is plenty of work ahead. That includes tying online recommendations into in-store interactions:

I think we're really at the beginning. We're scratching the surface, and I think already we're deeper than other retailers maybe, with what we do with their data. But I think, given the complexity of our product, it's all taste preference, right? How deep can we go with our recommendation engine? And we can bring that also to the clients selling at stores.

Looks like there is work ahead for AgilOne as well. Laporte joked:

Honestly, it's one of the best partnerships we have, and I'm not saying this because he's sitting here next to me. Omar and his team are super proactive.

We'll keep an eye on this one and get the updates.

Image credit - Photo of Laporte and Artun at NRF 2018 by Jon Reed.

Disclosure - NRF provided me with a press pass to NRF 2018. Diginomica is an official media partner of NRF 2018.